ET Now: I just wanted to understand the unified tariff proposal for gas is still very much a work in progress. Do you think the market is running ahead in that sense because they are already working with EPS estimates for GAIL?
Sanjiv Bhasin: That is the undertone of the market. You do not have leadership now, so you are looking for straws all around where you can see leadership and where a lot of the liquidity can be deployed.
Gas utilities have been in a very sweet spot, GAIL, IGL, Petronet on the back that gas prices are low and we have seen that demand has been maybe the best we have seen in almost three-four years given that fertilisers, power and the other sectors are all in excess demand of gas.
So yes, there will be a little bit more of to-ing and fro-ing on this unified platform for prices but all in all it should be a positive. However, like you said we think at Rs425-440 GAIL would be pricing in most of the positive and you would need a further trigger in the sense of the company itself guiding that what would be the profitability scenario on the margins front, maybe for one year.
Right now, the market is clutching for straws and giving excess multiples but in some niche businesses where visibility clearly seems to be on the positive side.
ET Now: How does one treat DMart because I cannot find a single bear on DMart? Everyone is convinced about the story but definitely not the pricing. For someone, who has completely been out because the float on the stock as well is just so minute, what do you do if you want to buy into the stock price?
Sanjiv Bhasin: This stock is getting more and more institutionalised there is a huge impact cost because the liquidity is low and valuations are running through the sky. So yes, it is one of the widest IPO performers but justifying valuation and multiples at this point would be difficult.
We had a neutral view on this whole sector. For us, the top performer which we were very bullish on was Future Lifestyle and Future Retail but that was when they were one-third the price. At these multiples, I would say that it is a pass through and if you have not got in, it would be better to avoid and you should wait for earnings for further visibility.Since we are bearish on the market as a whole, we still think that these will be few ideas which will stand out in the sun.
ET Now: Do you think the likes of Ashok Leyland, M&M, as well as Maruti in the passenger vehicles segment would continue to post strong numbers in the month gone buy?
Sanjiv Bhasin: Ashok Leyland and Maruti have been doing so consistently. For us, M&M is a laggard because in the SUV side they have, in the last two quarters, disappointed majorly. For M&M, it is just the tractor business which is doing well, the SUV side is a disappointment.
For us M&M is an underperformer. Maruti and Ashok Leyland both on the four-wheeler side, on the passenger vehicle and on the commercial vehicle are strong outperformers but we think that Tata Motors could actually be a dark horse given that it sells four times more than Ashok Leyland and we have seen a lot of traction on the CV side and in their new launch on the four wheeler on the passenger vehicle also.
So Tata Motors actually could actually surprise on the upside.